Estonia Inflation September 2016

Estonia: Inflation in September reached almost three-year high

October 14, 2016

In September, consumer prices inched up from a 0.1% month-on-month increase in August to 0.2%. According to Statistics Estonia (SE), the monthly reading mainly reflected higher prices in 7 of the 12 categories of the index, among which clothing and footwear was the category that increased the most.

Inflation rose 1.0% in September, which came in above August’s 0.3% print. September’s reading marked the second increase in annual consumer prices since June 2015 and the highest reading since January 2014. The annual increase was driven by the implementation of new excise taxes on alcoholic beverages and tobacco and the fading out of the low base effects of energy prices. Meanwhile, the annual average variation in consumer prices edged up from the 0.5% drop observed in August to a softer 0.3% decline in September.

HICP inflation was 1.7% in September, coming in above the 1.1% reading observed in August. Meanwhile, average HICP inflation inched up from 0.3% in August to 0.4% in September.

The Central Bank forecasts harmonized inflation averaging 0.6% in 2016 and 2.9% in 2017. FocusEconomics Consensus Forecast panelists expect harmonized inflation to average 0.4% in 2016, which is unchanged from last month’s forecast. In 2017, the panel expects average inflation to accelerate to 2.0%, which is also unchanged from last month’s forecast.

According to Statistics Estonia, growth in industrial production accelerated from a revised working-day adjusted 4.5% year-on-year increase in September (previously reported: +4.1% year-on-year) to a 6.2% expansion in October.